Consider Investing in Western Europe and Its Rebound Potential

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

(Note: First in a series on Europe-focused ETFs)

In our next ETF Talk series, we will highlight a few Europe-based exchange-traded funds (ETFs). European markets have been slumping for years, but the time for those countries to shine again may finally be around the corner as potential investments and renewed growth in European economies is beginning to take off.

SPDR Portfolio Europe ETF (SPEU) is about as close to a pure Western European investment vehicle as you can get, and it includes both large- and small-cap companies, though holdings are weighted by market cap. It is a simple idea aimed at investors who are looking to invest in the region broadly.

Over the last 12 months, this fund is down 6%. This is similar to the performance of other funds with similar investment theses, such as Vanguard FTSE Europe Index Fund (VGK). Western Europe has underperformed American markets over that time period, just as European markets have for years. SPEU holds $137 million in net assets. Its expense ratio is a fair 0.09% and it pays a current 2.36% dividend yield.

Chart courtesy of StockCharts.com

SPEU’s holdings cover a broad swath of industries. Its top holdings, by nation, are the United Kingdom, Switzerland, France, Germany and the Netherlands, though a number of other European countries are represented as well.

The top five largest individual holdings are Nestle SA, 3.36%; Roche Holding AG, 2.50%; Novartis AG, 2.20%; ASML Holding NV, 1.66%; and SAP SE, 1.61%. The top 10 holdings make up 17.5% of SPEU’s portfolio.

Exclusive  Hedge Against the Euro With This Fund

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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